How Much Does An IVA Leave You To Live On?

If you’re struggling to repay your debts, an IVA (Individual Voluntary Arrangement) could be a way to help you get back on track.

An IVA is a legal agreement between you and your creditors to repay your debts over a set period, usually five years. You could write off up to 85% of your debts as long as they agree to the terms.

You’ll make regular payments towards your IVA, and any remaining debt is written off at the end of the term.

How Much Does An IVA Leave You To Live On?

Before you enter into an IVA, it’s important to understand how much it will leave you to live on each month.

Your monthly payments will be based on what you can afford to pay, taking into account your income and essential outgoings.

This means you’ll need to provide details of your income and expenditure to your IVA provider so they can determine how much you can afford to pay each month. They will look into bank statements of your bank accounts to calculate a reasonable payment plan.

Your essential outgoings include things like

– Your mortgage or rent payments

– Council tax

– Gas and electricity bills

– Food and other household essentials

– Travel costs for work

– Childcare costs

Your disposable income is the money you have left after paying your essential living costs.

This is what you’ll use to make your monthly IVA payment, and you should also have enough left over for day-to-day living expenses.

For example, if your monthly income is £2000 and your essential outgoings are £1000, you’ll have £1000 left over.

You’ll need to pay £200 towards your IVA each month, leaving you with £800 for living expenses.

If you’re unsure how much disposable income you have, various online calculators can help you work it out.

Just enter your monthly income and outgoings, and they’ll do the rest

Once you know how much disposable income you have, you can start to look at different IVA options to see what’s best for you

Some IVA providers will want you to make payments for a more extended period of time than others, so it’s essential to compare different options before making a decision

It’s also worth bearing in mind that if your circumstances change during the course of your IVA, you may be able to negotiate a new payment plan

For example, if you get a pay rise or come into some money, you may be able to increase your monthly payments and repay your debt sooner

If you’re struggling to make ends meet, on the other hand, you may be able to reduce your payments or extend the term of your IVA

Either way, it’s essential to speak to your IVA provider as soon as possible so they can help you find a solution that works for you

An IVA can provide much-needed debt relief, but it’s not for everyone, once you have agreed to your minimum IVA payment, you are responsible for paying on time every single month, or you will be back to square one again.

If you’re not sure whether an IVA is the right option for you, it’s important to get advice from a qualified debt advisor. You can make contact with StepChange Charity or Citizens Advice for further free debt assistance. You can also use the

The Money and Pensions Service (MaPS) is a government-backed service that helps people make the most of their money and pensions. They provide free, impartial advice and guidance to help people make informed choices about their finances.

They’ll be able to assess your financial situation and advise you on the best way to move forward, and provide debt solutions.

Several organisations offer free debt advice, so it’s worth speaking to one of them before making any decisions.

Does An IVA Take All My Money?

No, an IVA does not take all of your money.

Your IVA provider will work out how much you need to pay each month based on your income and expenditure, and they’ll make the payments to your creditors on your behalf. Creditors will look into your income and outgoings and agree to a monthly payment with you that is affordable but also pays back what is owed in a reasonable time frame.

They will ensure that you can afford to live on your remaining income and cover your essential outgoings, such as food, housing costs and utility bills.

How Much Will My IVA Payments Be?

Your IVA payments will be based on your income and expenditure.

Your IVA provider will conduct a financial assessment to determine how much you can afford to pay each month. This will take into account your income, essential outgoings and any other debts you have.

Based on this assessment of your financial circumstances, your IVA provider will agree that a monthly payment with you is affordable and meets your creditors’ needs. The IVA proposal will be discussed with yourself and your IVA provider, and you will go into detail on what you think is appropriate and if you can reduce your outgoings.

What Are My IVA Spending Restrictions?

When you take out an agreed IVA, you will be required to be responsible with your money and to ensure that you make your monthly payments on time. You will also be asked to provide your IVA provider with details of your income and expenditure each month so that they can monitor your progress.

As part of your IVA agreement, you may have to agree to certain spending restrictions. This means that you may not be able to take out any new lines of credit, such as loans or credit cards, and you may have to limit your spending to a certain amount each month.

If you’re struggling to stick to your spending restrictions, it’s important to speak to your IVA provider as soon as possible.

What Happens After 5 Years Of Paying An IVA?

Once you have reached five years of paying off your IVA to your debtors, any remaining debt that is left is forgiven. This allows you to have a clean slate and start fresh with your finances. It’s important to remember that an IVA will stay on your credit file for six years from the date it is set up. This means it can still impact your ability to take out credit during this time.

If you’re struggling to make ends meet, on the other hand, you may be able to reduce your payments or extend the term of your IVA.

Is There a Maximum Length Of Time An IVA Can Last?

The short answer is no. This depends on whether you are making payments on time and in full. If you are, your IVA can last up to 5 years. However, if you miss a payment or make a partial payment, your creditors may choose to end your IVA early. In this case, you will no longer be protected from legal action and could end up having your assets seized.

It’s also worth bearing in mind that if your circumstances change during the course of your IVA, you may be able to negotiate a new payment plan. For example, if you get a pay rise or come into some money, you may be able to increase your monthly payments and repay your debt sooner.

If you’re struggling to make ends meet, on the other hand, you may be able to reduce your payments or extend the term of your IVA. Either way, it’s important to speak to your IVA provider as soon as possible so they can help you find a solution that works for you.

Can I Pay My IVA Off Early?

Yes, you can pay your IVA off early, but there may be consequences.

If you’re in an IVA, you’ll have agreed to make regular payments towards your debt for a set period of time – usually five years. At the end of this period, any remaining debt is written off.

Paying off your IVA early means that you’ll no longer be protected from legal action by your creditors, and they may start proceedings to recover the debt.

It’s important to speak to your IVA provider before making any decisions about paying off your debt early. They’ll be able to advise you on the best course of action for your individual circumstances.

The best option is to make contact with debt charities like Step Change for impartial advice on how to deal with your debts before you make contact with anyone else.

What are IVA Disbursements?

IVA disbursements are payments that are made to your creditors as part of your IVA agreement.

Your IVA provider will work out how much you need to pay each month based on your income and expenditure, and they’ll make the payments to your creditors on your behalf.

Disbursements are usually made on a monthly basis, but they may be made more or less often, depending on your individual circumstances.

If you’re struggling to make your IVA disbursements, it’s important to speak to your IVA provider as soon as possible. They’ll be able to help you find a way to make the payments that’s suitable for your circumstances.

Does An IVA Show Up On a DBS Check?

No, an IVA will not appear on a standard DBS check. However, it will show up on an enhanced DBS check. If you’re applying for a job that requires an enhanced DBS check, your prospective employer may ask about your IVA and how it has affected your finances.

It’s important, to be honest about your IVA when applying for jobs, as failing to disclose this information could lead to you being dismissed from your role. Especially roles that may involve handling money, as your employer will need to know that you’re able to manage your finances responsibly.

If you’re unsure about whether or not to disclose your IVA on a job application, it’s best to speak to your IVA provider for advice. They’ll be able to tell you what information you need to disclose and how it may impact your job prospects.

What Jobs Can’t You Do With An IVA?

Having an IVA should not affect your job in most cases. However, there are a few exceptions where an IVA may cause problems.

Suppose you work in a role in accountancy, law or financial services, such as banking that involve handling money, such as in a bank or as a bookkeeper. In that case, your employer may be concerned about your ability to manage your finances responsibly. In this case, they may ask you to disclose your IVA on your job application or during an interview.

It’s also worth bearing in mind that some employers run credit checks on their employees. If your IVA shows up on a credit check, this could affect your chances of being offered the job.

Can You Go On Holiday With An IVA?

Yes, you can go on holiday with an IVA.

Just ensure you can still continue to pay monthly payments on time. If you’re struggling to make your payments, speak to your IVA provider as soon as possible to discuss your options.

Can I Get a Phone Contract With An IVA?

Yes, you can get a mobile phone contract with an IVA, but your options may be limited.

Some phone companies will do a credit check before they offer you a contract, and if your IVA shows up on this check, they may refuse to provide you with a service.

A few mobile phone companies don’t run credit checks, so it’s worth doing some research to see if any operate in your area. You may also want to consider prepaid phone plans, as these don’t require a credit check.

How Do IVA Companies Make Money?

IVA companies make money by charging fees for their services.

Your IVA provider will charge you a setup fee when you start your IVA, and they’ll also charge you an annual fee for as long as your IVA lasts.

The fees charged by IVA companies vary, so it’s important to shop around and compare different providers before you choose one.

It’s also worth bearing in mind that some IVA companies may offer discounts or other incentives, such as waived fees, so it’s always worth asking about these before you agree to anything.

What you must be aware of is even if charities like Step Change offer free financial and debt advice, they still charge fees once they set up your IVA. This is something that will come out of your monthly payments.

Please make sure you are aware of all the fees involved before agreeing to an IVA so that you know exactly how much it will cost you. Every single IVA company will charge you for setting up an IVA, so don’t be surprised by any fees that come from them. None of them are free, but you can always shop around to find the best options for your circumstances.

Conclusion

An IVA can be an excellent way to deal with your debt if you’re struggling to make your repayments. It can help reduce your monthly payments and give you a more manageable way to pay off your debts.

However, it’s essential to be aware of the costs involved in taking out an IVA, as well as the restrictions that may be placed on your spending. Make sure you understand all of the terms and conditions before you agree to anything, and speak to your IVA provider if you’re struggling to make your payments or stick to your budget.

Let us know your thoughts and experiences with IVAs in the comments!